Starbucks Q3 FY 2016 Earnings Preview: Continued Focus On China, Expansion Of The Single-Serve Segment To Drive Results
Key Trends:
1) Expanding the single-serve segment in China/Asia Pacific (CAP) and Europe
- Leading market share in the U.S. in premium roast and ground, and single-serve segment.
- Leveraging its retail store footprint and customer relationships in China to expand its single-serve segment across the CAP region.
- Partnership with Nestle to sell Starbucks branded Nespresso compatible pods in Starbucks retail markets around the world, starting with Europe.
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2) China, the key growth market
- Starbucks has over 2,000 stores in 100 cities in China, and is adding over 10 new stores every week to leverage the growing middle-class population. It aims at increasing its store count in China to over 3,400 by the end of 2019.
- A partnership with Tingyi, a Taiwanese drinks maker, will provide Starbucks with over 1 million points of ready-to-drink Frappuccino distribution in China.
- Scheduled its third roastery opening in China.
- Focus on accelerating sales of Teavana handcrafted tea beverages.
3) Digital and other innovations
- Changes to the Starbuck rewards program may adversely affect top-line in Q3.
- Introduction of true real-time personalization to help with targeted marketing.
- Mobile Order & Pay continues to be increasingly embraced by customers.
- Innovation in cold beverages, including iced black coffee, refreshers with coconut water, and product line extensions for Frappuccino and Doubleshot Energy drinks to support revenue growth.
- Challenging consumer, economic, and geopolitical environment across EMEA may cause a slowdown in the region for the company.
Have more questions on Starbucks? See the links below.
- How Has Starbucks’ Revenue And EBITDA Composition Changed Over 2011-2015?
- By What Percentage Have Starbucks’ Revenues And EBITDA Grown Over The Last Five Years?
- What Is Starbucks’ Revenue & EBITDA Breakdown?
- What’s Starbucks’ Fundamental Value Based On Expected 2016 Results? (Updated After Q2 FY’16)
- Starbucks Q2 FY 2016 Earnings Preview: New Developments In China/Asia Pacific Region To Steal The Limelight
- Where Will Starbucks’ Revenue And EBITDA Growth Come From Over The Next Three Years? (Updated After Q2 FY’16)
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